Half-year 2009 Results. July 31, 2009

Transcription

1 Half-year 2009 Results July 31, 2009

2 Disclaimer All forward-looking statements are Schneider Electric management s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.

3 04 Overview 10 One: at work to contribute to resilience and prepare the future 20 Finance presentation 32 Outlook 3

4 Overview

5 We are the global specialist in energy management Energy production Thermal Nuclear Genset Hydro Solar Wind Energy Management Making energy: Safe Reliable Efficient Productive Green Energy Usage Appliances HVAC Lifts Motors Machines Conveyors IT servers We help our customers achieve more while using less of our common planet 5

6 with a balanced global footprint North America 28% RoW 11% Western Europe 35% Eastern Europe 6% Asia Pacific 20% Presence in more than100 countries New economies sales 32% of Group % of 2009 H1 Sales 6

7 and diversified end-markets Data Centers Energy & Infrastructure Electrical energy Oil & Gas 16% 17% Buildings Marine Hospitals/Public Water 31% Offices Industrial Industry 26% Retail OEMs Mining, minerals & metals 10% Residential % of 2008 Sales 7

8 We are committed to innovation For Buildings & Residential Green power batteryless & wireless switch based on Zigbee technology For Industry SoMachine. One single software to reduce time to market. Time of design reduced from 18 to 4 months For Power Compact NSX, the first circuit breaker that combines protection and monitoring of power consumption For IT Surge protector with LCD Timer, enabling significant energy savings Partnering with best-in-class public and private organizations (IBM, Cisco, Microsoft, MIT, Shanghai University) Committed to standardization (Green grid, Zigbee, IEC) Leading innovation projects (Minalogic, Tenerrdis) 8

9 We are a socially responsible company committed to sustainable development Our Foundation demonstrates our commitment Be an involved party to provide energy access to the 1.6 billion people currently without electricity Support the insertion of underprivileged young people through our businesses Contribute to start-up companies in our business Support the reconstruction for the victims of natural disasters A recognised performance A measured performance We are in the main Socially Responsible Investment (SRI) indices ASPI, Dow Jones Sustainability World, Ethibel Sustainability Index #95 in latest Covalence ethical ranking Our Planet & Society Barometer Score / 10 Jan. 09 Q Target Our performance: from 3.6 to 8/10 9

10 One: at work to contribute to resilience and prepare the future

11 Focused execution of One company program in tough business environment Solutions growth at +11 pts above group average Growth in new economies +6 pts above mature countries Support function cost reduction ahead of plan: 310m Productivity resisted to sharp volume fall and is ramping up fast H1 results EBITA margin: 11.6% before restructuring costs Free Cash Flow: 726m up 8% vs H

12 Solutions and services approach reduces impact of market slowdown Growing need for energy efficiency Sales organic growth -18% -7% Strong demand in services Group Solutions Deployment of complete solutions for renewable Acceleration of our solutions capability Gearing up EcoStruxure Trained 900 to date Solutions Share in Group sales 28% 32% H H

13 Gearing up to support our move in solutions Building management & security Power White space Process & Machines Third party systems Key enabler to complete solution approach Guaranteed compatibility of different offerings of Schneider business portfolio to generate synergy for customers Up to 30% energy efficiency Capex & Opex reduction Enabled by the right connecting technologies (IP as common highway, Web services) Some quick wins already on the market Power monitoring integrated with building management system Integration of remote video control within the industrial process software Consolidation of power monitoring with manufacturing execution system (MES) at enterprise level 13

14 New economies held up better than mature countries 32% of group sales China gaining momentum Growing Africa Hard hit Eastern Europe Sales organic growth -20% -14% Progressive recovery of their structurally higher growth potential Acceleration of penetration With bolt-on acquisitions: Conzerv (India), Microsol (Brazil) Specific attention on talents Mature economies New economies New economies Share in Group sales 30% 32% H H

15 SFC reduction ahead of plan thanks to mobilization at all levels Support function costs analysis (in m) Target savings by end , Global Salary Scope IT inflation & Fx system + others Savings 2, Structural savings 400 Crisis adaptation H reported H before savings H reported Benefits from initiatives launched as early as Q Accelerated execution to reach savings target faster than planned 15

16 Key actions taken to reduce SFC Simplification streams Finance & HR optimization Actions undertaken On-going deployment of global shared services Expertise globalization (tax, legal, finance, HR) Progress vs. plan Marketing simplification Audit of overlap business unit/zone and levers of efficiency Marketing globalization Launch of One Web in 85 countries Sales Force Effectiveness Alignment on best practices on sales efficiency Other actions Co-location IT globalization Commercial sites rationalization Brand migration 16

17 In progress to boost productivity in the supply chain References (number of SKUs) 800k 626k 400k % of purchases with selected suppliers 39% 44% 70% 2008 H target 2008 H target Rapid start for the optimization of offerings (-170k SKUs) Good progress of supplier concentration 17

18 Strong effort to absorb manufacturing base costs despite sharply lower volume H1 industrial productivity performance (in m) Target savings by end 2011 Purchasing 53 Lean Manufacturing Rebalancing Productivity before fixed manufacturing costs Industrial productivity (Under) absorption of fixed manufacturing costs (95) 400 First benefits of initiatives pushed productivity to positive territory in Q2 Continued ramp-up of productivity into the year 18

19 Resilience demonstrated despite unprecedented market downturn EBITA 1 margin Free cash flow (%) Organic growth (bars) H108 H % 15.8% 13.4% 11.4% 12.4% 11.6% 7.5% 2.5% 9.5% 9.4% +14% +8% +9% -5% Before restructuring costs -18% : EBIT, : EBITA 19

20 Finance presentation

21 H1 topline affected by weak end-markets Sales organic growth by division Sales organic growth by region H H Electrical Distribution -13.0% Europe -19.1% Automation & Control Critical Power -26.7% -17.7% North America Asia-Pacific Rest of the World -22.6% -15.3% -2.1% Group -17.9% Group -17.9% 21

22 Margin supported by cost reduction benefit In m H H Change Sales 8,946 7, % Organic growth -17.9% Gross profit 3,681 2,974-19% Margin % 41.1% 38.3% -2.8pt R&D expenses (199) (180) -10% 3 SG&A expenses (2,064) (1,895) -8% EBITA 1,2 before restructuring 1, % Margin % 15.8% 11.6% -4.2pt 1 After reclassification of the interest component of defined benefit plan costs (see appendices for details) Reclassification impact on H margin is +0.4pt vs. +0.2pt in H EBIT before amortization and impairment of purchase accounting intangibles 3 R&D budget (including charges in Cost of Goods Sold) down 2% in H1 to 374m or 4.8% of sales 22

23 Net income impacted by exceptional items In m H H EBITA before restructuring % 1, Margin % Restructuring costs 15.8% (52) (112) Step-up in restructuring charges to support cost initiatives EBITA Amortization & impairment of purchase accounting intangibles 1,359 (49) 791 (108) Including 50m impairment for Customized Sensors business unit in 2009 EBIT 1, Net financial expense 1 Income tax (132) (313) (198) (114) Net financial expense increase detailed in slide 31 Equity investments Minority interests 6 (20) (8) (17) Effective tax rate remains attractive at 23.5% Net income (group share) Earnings per share Adjusted net income Adjusted net income down 44% 1 After reclassification of the interest component of defined benefit plan costs (see appendices for details) 2 Adjusted for restructuring costs and purchase accounting related charges, at the period s effective tax rate 23

24 Volume effect partially offset by cost actions and prices 1,411 Analysis of change in EBITA before restructuring (in m) Volume -95 Fixed manuf. costs Mix -3 Inflation Price +95 Productivity Support function costs Other -13 Currency effects 3 Scope 903 H H m brought by prices and cost savings 1 Industrial productivity of +95 before -95 of under-absorption of fixed manufacturing costs 2 Of which Raw materials: +23, Production labour & other Costs: Of which translation: +71, transaction:

25 Europe profits hard hit by downturn while new economies posted better resistance EBITA before restructuring by region (before corporate costs 1 ) Sales 7,755m Europe % 19.8% -6.3 pts Asia-Pacific 20% Rest of the World 11% Europe 41% North America Asia- Pacific % 15.2% 14.1% 16.0% -3.5 pts -1.9 pt North America 28% Rest of the World % 16.1% +2.8 pts H H Corporate costs of 160m in H ( 157m in H1 2008) 25

26 Automation & Control impacted by weak industry markets, Critical Power margin almost stable EBITA before restructuring by business (before corporate costs 1 ) Electrical Distribution 58% Sales 7,755m Automation & Control 27% Electrical Distribution Automation & Control % % 15.9% 19.4% -2.7 pts -8.2 pts Critical Power 15% Critical Power % 13.7% -0.8 pt H H Corporate costs of 160m in H ( 157m in H1 2008) 26

27 Net debt reduced by over 1bn over the past 12 months thanks to robust free cash flow Analysis of debt change in m H H LTM Net debt at opening (4,936) (4,553) (5,220) Operating cash flow 1, ,071 Capital expenditure net 1 (314) (288) (667) Change in operating working capital (260) Change in non-operating working capital 50 (52) (88) Free cash flow ,786 Dividends 2 (796) (315) (315) Acquisitions (170) (41) (469) Capital increase Other 2 41 (63) Increase (decrease) in net debt (284) 411 1,078 Net debt at June 30 (5,220) (4,142) (4,142) 1 Including R&D capitalization of 112m ( 212m in LTM) 2 Dividends paid in 2009 amount to 837m, of which 522m have been paid in shares (at shareholders option) 27

28 Tight inventories and receivables control limits variation in working capital requirement ratio Days of receivables 1 56 days -1 d Days of inventories 2 WCR 4 88 days +4 d 22.1% +0.8pt Days of payables 3 56 days -2 d 1 Days of sales 2 Days of COGS (cost of goods sold) 3 Days of purchases 4 % of sales 28

29 Cash generation remains robust Free cash flow in m Cash conversion (Free cash flow / net income) 1,530 1,735 1,786 97% 103% 152% LTM June LTM June

30 Net debt / EBITDA credit ratio remains low at 1.5x only Net debt / EBITDA 1 Free Cash Flow / Net debt 1.6x 1.4x 1.5x 31% 38% 43% LTM June LTM June EBITDA of 1,064m in H ( 1,619m in H1 2008) 30

31 Strong liquidity, reinforced throughout the crisis Breakdown of net debt (in bn) Increase in net financial expense of 66m, of which: Increase in interest expense June June 2009 Decrease in interest income +6 Higher pension and retirement charges +17 Lower dividends received, capital gain not repeated +23 Cash balance increased by 1.2 billion Undrawn credit facilities of 3.0 billion 31

32 Outlook

33 Full year outlook Business trends Profitability End markets to remain soft Exposure to more resilient new economies Early signs of sequential improvement in some business segments Productivity ramping-up Continue our effort on cost reduction Lower raw material prices to offset price effect in H2 More restructuring charges in H2 to support 2010 savings H2 organic sales trend to be in line with the level of H1 12% EBITA margin before restructuring costs 33

34 Working towards long term resilience Energy management: a promising business Unique business portfolio with leadership position Strong footprint in new economies Laying a strong base for long term growth and profitability One: an ambitious program to guide us through to 2011 Leaner cost structure Focus on cash management Capture growth opportunities 34

35 Appendices

36 Details on the pension reclassification H H H H H Interest cost Expected return on assets Net charge reclassified Change in presentation for the interest component of defined benefits plan costs Reclassification of the net charge from operating expenses to net financial costs Consistent with IFRS rules and in line with best practices Applied from H onwards with 2008 restated accordingly H H H Initial P&L reported EBITA before restructuring 1,398 1,520 % of sales 15.6% 16.2% Finance costs + 13m Profit for the period pt - 13m After reclassification EBITA before restructuring 1,411 1, % of sales 15.8% 16.3% 11.6% Finance costs Profit for the period

37 Definitions EBITDA: EBITA: Cash conversion: Free cash flow: EBIT before net depreciation and amortization EBIT before amortization and impairment of purchase accounting intangibles and impairment of goodwill Free cash flow / net income Operating cash flow change in working capital net capital expenditures 37

38 Contacts & agenda Carina Ho - Head of IR - carina.ho@schneider-electric.com Grégoire Rougnon - IR manager - gregoire.rougnon@schneider-electric.com 22 October Q Sales Conference call 9:00am 38

39 Help people make the most of their energy